Problem 15-7 (Algo) Lease amortization schedule [LO15-2, 15-6] On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing's lease amortization schedule appear below: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Payments Effective Interest Decrease in Outstanding Balance Balance 243, 270 Jan. 1 2021 2021 2022 2023 2024 2025 2026 22,000 22,000 22,000 22,000 22,000 22,000 17,702 17,358 16,986 16,585 16,152 22,000 4,298 4,642 5,014 5,415 5,848 221,270 216,972 212,330 207,316 201,901 196,053 2038 2039 2040 2041 22,000 22,000 22,000 46,567 7,274 6,096 4,824 3,449 14,726 15,904 17,176 43,118 76,198 60,294 43,118 Required: 1. What is the lease term in years? 2. What is the asset's residual value expected at the end of the lease term? (Round your answers to nearest whole dollar.) 3. What is the effective annual interest rate? (Round your percentage answer to 1 decimal place.) 4. What is the total amount of lease payments for United? (Round your answers to nearest whole dollar.) 5. What is the total amount of lease payments for NIC? (Round your answers to nearest whole dollar.) 6. What is United's net investment at the beginning of the lease (after the first payment)? (Round your answers to nearest whole dollar.) 7. What is United's total effective interest revenue recorded over the term of the lease? (Round your answers to nearest whole dollar.) 8. What amount would NIC record as a right-of-use asset at the beginning of the lease? (Round your answers to nearest whole dollar.) 20 years 1 2 $ 46,567 8.01% 3 Lease term Asset's residual value Effective annual interest rate Lease payments for United Lease payments for NIC Net investment 4 5. 6. 7 Total effective interest revenue